Biggest threat to the 3DS and PlayStation Vita? Your smartphone

The 3DS has stumbled in a market that Nintendo used to dominate, and the more- …

Nintendo fired the first shot in the latest war over portable handhelds with its 3DS, but things are not going well for the company that used to comfortably own the portable market. Sales of the hardware is slower than expected, games are being held back until more gamers exist to buy them, and Nintendo was forced to radically slash the price in an attempt to drum up consumer interest. Nintendo is facing many challenges these days, but it's not just competing with its own past systems and the upcoming Sony Vita—its largest competitor may be your smartphone.

The 3DS is in trouble, but who is it fighting?

There are two ways to look at Nintendo's stumble vis-à-vis the Vita: Sony has been given a great opportunity for success, or Sony will face the same mass of budget-conscious gamers who have moved on to less expensive but fun smartphone titles. Dedicated portable gaming devices used to do battle only with each other, but now they face an external threat.

"I honestly don't know what [the 3DS sales] means for the Vita—it depends largely on why you think the 3DS is having trouble," Penny Arcade's Jerry Holkins wrote. "Certainly, games on the Vita look more expensive than their 3DS counterparts, and we can be confident that there'll be a premium attached. The reality for me is that even as a 'gamer,' an enthusiast, a true adherent, my phone is enough even on a trip. Period."

The point sometimes escapes people when they talk about how much better dedicated portable devices are for playing richer games. But most games simply have to be "good enough" and convenient. If you already have a smartphone and an hour to kill, plenty of top-notch games can be downloaded in a minute for a dollar. With the 3DS or Vita, you're being asked to buy expensive hardware and then feed it with games that cost $40 and up.

Smartphones also present a compelling deal for small, adventurous developers: it's inexpensive to create a game for these platforms, and developers don't have to worry about physical storefronts, packaging design, or cartridge manufacturing. Sony is now pushing for a digital platform that relies heavily on downloads with the Vita, but Nintendo still seems to believe the future rests with expensive, physical carts. Trying to buy one of the few digital games available on the 3DS via the system's e-shop is a slow, frustrating process.

"I don't believe there is a direct competition between the 3DS experience and that delivered on smartphones; however, I do agree there may be some causal factors related to the growing mobile trend, specifically with developers beginning to experiment within these new emerging markets, which may have stolen resources away from more traditional projects, ultimately impacting the quality," Jesse Divnich, the VP of Capital Research and Communications at EEDAR, told Ars. He points to a lack of AAA content as a major reason for slow 3DS sales and claims that better games and lower prices during the holiday season will help sales.

"I don't get the sense that developers are preferring one platform over another," Divnich continued. "At the end of the day, our industry goes where the money goes, and if developers can earn more money on emerging platforms, that is where the talent will ultimately transition to."

Phones will make gaming truly mass market

PopCap has seen great success releasing fun, high-quality games at low prices on a number of platforms, and it has gamers playing its titles on everything from phones to the screens on the back of airplane seats. The company was recently acquired by EA for a reported $1.3 billion and should remain one of the most powerful players in the digital gaming landscape. For PopCap, cell phones are going to be the mainstream gaming "console" moving forward.

"Increasingly, games are designed with mobile devices in mind. PopCap is not only on board with this, but has been at the forefront of this movement, and we see those trends gaining further momentum in the future, which reflects our strategic directions," Giordano Bruno Contestabile, PopCap's senior director of Product and Business Strategy Mobile, told Ars. He pointed out that many gamers still want to play games on their portable gaming devices and they will be supported, but the growth and convenience of mobile phones as game consoles is hard to ignore.

"My view is that smartphones will constitute the quintessential mass-market platform, while dedicated handheld consoles will represent significant and important niches," he explained. "And, to be clear, what I mean with this is that smartphones have the potential to make the majority of the world's population into gamers, therefore greatly widening the overall market and making most traditional platforms 'niche.'"

Huge numbers of people already own a smartphone, the devices are carried everywhere, and great games are always available at a low cost. With discretionary spending taking a dive in many households, both the 3DS and the Vita are going to face the challenge of convincing us we need to spend hundreds of dollars on new hardware—and one more thing to carry in our pockets—along with games that are exponentially more expensive than those available in the iOS and Android marketplaces.

My nine year old nephew informed me last week that he definitely wanted a 3DS rather than an iPod Touch because it's 3D! That's better than the iPod Touch which isn't 3D at all. But I think in a few years he'll see the benefit of the iPod. Being able to buy a game a week with his allowance rather than saving up for a $30 or $40 game is a big advantage.

Nintendo needs to wake up to the fact that game prices are going down. A game like the Legend of Zelda will probably still sell for $50, but they need to be competing more strongly in the under $10 market. That means getting their Internet connectivity sorted out and expanding the selection of downloadable titles.

I think the 3DS' weakness in the market comes primarily from its poor selection of games- once the first-party titles (Nintendo's traditional strong point) come pouring in, then I predict we'll see a different story in the sales numbers.

The smartphone will probably kill the market for games like Brain Age, though. (Which I suppose is good news for the Vita, since Sony has never done as well in Nintendo in that sort of realm anyway)

Nintendo needs to wake up to the fact that game prices are going down. A game like the Legend of Zelda will probably still sell for $50, but they need to be competing more strongly in the under $10 market. That means getting their Internet connectivity sorted out and expanding the selection of downloadable titles.

Bah on you, they have no problem selling you the original gameboy kirby's dream land ported to the 3DS for $8. Whereas all you get from Sony for the same individual price are PS3/PSP ports of Final Fantasy 7-9. And you say Nintendo doesn't understand the value of their games?!

From my perspective, the problem with the 3DS is that its most compelling game is Ocarina of Time. I already own this game three times - on my N64, on my Gamecube (both of these were pre-owned), and on my Wii virtual console.

If I already owned a 3DS, I'd probably buy it a fourth time. But I'm definitely not going to buy the system for this game.

Mind you, I think gaming peaked with the PSX/N64/Dreamcast, and has been suffering a slow decline ever since, so maybe I'm not the right person to ask.

I think the 3DS' weakness in the market comes primarily from its poor selection of games-

Yeah, it was a really weak launch lineup, and hasn't filled in yet.

I'm not convinced about smartphones or tablets being the only game in town for gaming though. They're great for quick games, but lack of buttons is a real problem, and i haven't really seen a game on them which can tell a story (except for the Final Fantasy ports.) For casual games they are great, and popcap helped create the casual market with bejeweled and the like so of course they think they're the future, but I see it more as expanding the market (like the wii did with bringing pensioners to home consoles), rather than just replacing the existing gaming system.

While the 3ds might not be as successful as the GBA was, Nintendo showed with the gamecube that they can survive with even a poor console. And even though TV was seen as a huge threat to theaters, blockbusters and even indie cinema is still being made today despite the popularity of 30 minute sitcoms and reality shows.

Maybe I'm too on top of this issue, but this sounds like old news. That said, I certainly agree with the article.

@Imajin: the 3DS's weakness--really, Nintendo's weakness--is they're trying to tap into the market of casual gamers...but how can you possibly get more casual than playing games on your phone? Carrying around a Vita or a 3DS is about as un-casual as you can get about gaming. Carrying around a dedicated device is "hardcore", so to speak.

I'm not really inclined to buy another DS or a Vita when I can play many of the same games on my phone--this will become even more true going forward, as companies like EA solidify their presence on the mobile/phone platforms. Dedicated portable game devices are now forced to stick with the hardcore market. Casual is essentially lost to them.

If someone wants to make a portable gaming device successful, I think it also has to be a non-portable gaming device. E.g., shrink my PS3 down to a portable size, so I can play my big-budget PS3 games on the go OR plug it into a TV and use it with a controller, and I will consider replacing my PS3 with that gadget.

By "smartphone," don't you really just mean the iPhone? Game devs certainly aren't making a run for the booming Android goldmine.

Also, the only genre that touchscreen controls aren't so hot in is traditional action games (platformers, shooters, fighters) where you have to move your character around with fast reaction times. Everything else works pretty damn well, I've found.

I couldn't agree more. My PSP and DS haven't made it out of the drawer in months. My iPhone and iPad now own my time and wallet. Vita looks awesome and my inner gamer pines for one, but I wont be buying it. I know that's only a survey of one but I see anecdotal evidence of this trend everywhere I look.

Or it could just be that the 3DS suck ass. The 3DS didn't bring anything useful to the table and pretty much made the DS worse by sucking up more power in the process and costing more.

The Vita on the other hand could work out. Really don't know. Obviously the games are a problem with the 3DS, but that's not because smartphones games are so much better. It's just like with almost every other Nintendo product, 3rd party support sucks dick. Nintendo has been propping themselves up on first party games since the N64 really. Still not sure why the third party support sucks after the massive success of the Wii and every gameboy version except the 3DS.

God I hate these kinds of articles. While it's true smartphones will bring casual gaming to the mass audience, it's also true the dedicating gaming market will continue to grow. It's not a zero-sum game. As emerging economies become richer their populations will buy more devices, and both smartphone and gaming handheld markets will benefit.

The idea that gamers are going to settle for touch-screen controls and pathetic Flash games is ludicrous. As for "more complex games" coming to smartphones, in the past gamers steadfastly refused to play FPS's on handhelds with D-Pad controls. That's why Sony is releasing a dual-analogue handheld. They'll attract the massive Call of Duty crowd that would never be satisfied with the 3DS's single analogue stick, or the PSP's thumb-cramping analogue "nub". They're already chomping at the bit to play PS3 quality CoD on their handhelds.

And you think the Vita, with its inevitable massive FPS fanbase, is going to suffer in market share thanks to smartphones?

The 3DS sold poorly because it was overpriced and lacked games. With its price drop and upcoming slew of AAA titles it will perform much better.

Mind you, I think gaming peaked with the PSX/N64/Dreamcast, and has been suffering a slow decline ever since, so maybe I'm not the right person to ask.

Interesting. I'd say it peaked with the PS2, but possibly the Dreamcast. In terms of sales, I think that bears out decently, since the video game console industry was still growing strongly during the PS2's reign--and PC gaming was shrinking.

I thought PC gaming was still relatively small, but apparently it's overtaking video game consoles now. Granted, Facebook games probably make up a big part of this, which is just garbage.

Most of the smartphone game sales are a new market, not cannibalization of the portable market. Without buttons 80% of traditional console type games are completely impractical for a phone. The 3DS will be big, probably not as big as the DS, but a solid console none the less. People declaring that Nintendo is doomed are forgetting that they basically won the lottery with the Wii and DS, nobody should seriously expect them to release something that overwhelmingly popular again, it's just not likely. That doesn't mean they are in trouble, they have weathered much worse than this (N64, GC).

Sony OTOH, who the hell knows. There is a market there for the Vita, but even odds that they will stab themselves to death before they manage find it.

The barriers to entry on the 3DS are too high and the software is lacking. This sets up a nasty deadlock situation that's going to create a bunch of trouble for Nintendo. They don't have enough games to attract someone like me, and they can't get more games until they finish developing them because only select partners who can afford to distribute cartridge games are able to acquire overpriced development units. I'm not so sure this is a huge competition case between portable game systems and smartphones. I think this has more to do with the decline of the publisher-based business model for selling games. Nintendo needs to learn how to court developers like PopCap and Rovio and others. They can't simply rely on EA and Square anymore.

I've personally never found purchasing games from the 3DS eShop to be either slow or frustrating. In any way. The 3DS needs a stronger library if it's going to compete (though that's on the way), but there's little doubt in my mind that when it comes to gaming, having real buttons makes all the difference.

Games made for the mobile phones are pretty much the reality shows of the game industry... They're just cheap entertainment made for the lowest common denominator. It seems like that serious gamers will continue to want more tactile controls for their games (be it a controller from a console, or keyboard and mouse for the PC) and games with more content. I personally loath touch screens and will never adopt those games. I'm not saying other "serious gamers" won't be buying games from app stores, but I think they'll continue to buy the higher end consoles, PC's and handheld systems.

The problem with the 3DS, as most other people are pointing out are lack of content and high price. (The 3D screen isn't a selling point for me, either... The thing gives me a headache in about 90 seconds!) The PS Vita seems to have a solid line-up so far, and has my attention!

The barriers to entry on the 3DS are too high and the software is lacking. This sets up a nasty deadlock situation that's going to create a bunch of trouble for Nintendo. They don't have enough games to attract someone like me, and they can't get more games until they finish developing them because only select partners who can afford to distribute cartridge games are able to acquire overpriced development units. I'm not so sure this is a huge competition case between portable game systems and smartphones. I think this has more to do with the decline of the publisher-based business model for selling games. Nintendo needs to learn how to court developers like PopCap and Rovio and others. They can't simply rely on EA and Square anymore.

Virtually every publisher has many games on the DS, certainly PopCap does.

It's interesting: from time to time I still pull out my Sonic collection, or Megaman and revel in the history and nostalgia of when games were my life. Now I have kids and a house and a lot less time to play. It doesn"t stop me from running through Secret of Mana or Phantasy Star again though.

So that begs the question... 15 years from now are the kids of this generation going to start up Farmville or Angry Birds and have the same feelings? It seems that people are using games these days to waste time, instead of actually becoming absorbed into the game either for story purposes or just to prove they can master it.

So many all agree - it is the controls that would dramatically improve smartphone gaming...

Is there any reason a company couldn't build a control pad (like the Vita has) - with a "gripper" to hold a smartphone slightly angled above it, and communicate to a smartphone via bluetooth or the USB jack?

Best of both worlds. When you want to game, pull out your "control clamshell", clip it onto the phone, and game away. Go a step further and make it a secondary battery

How many times do we have to hear this weak argument? No one is buying a smartphone as a dedicated gaming device. It's simply not happening. This argument is no different than saying that integrated graphics solutions will completely do away with the need/desire for a dedicated GPU or that Facebook gaming will completely replace hardcore PC gaming. They don't hold water and they're built on faulty anecdotal evidence.

Ppl play games on their smartphone because they're bored or need a few minutes of distraction. Ppl play games on their PSP/PSV and DS/3DS because they actually want to sit down and have an engrossing experience. The fact that your phone is your lifeline, and still cannot provide the same types of experiences that dedicated devices can, is why it won't replace those devices.

As an ancillary point, if the market were to ever get to the point where it replaced dedicated devices, don't think for a minute developers, and more accurately, publishers, wouldn't jump at the chance to increase profits. Gaming at that scale isn't sustainable at $.99.

Isn't there a $299 VITA coming with 3g/ATT? If so I think the real question is if it will be able to double as a phone, and, if so, will SONY allow developers to create apps for it. If SONY can create another viable platform beside Android and iOS where the focus is games first and phone second then I think VITA has a chance. Certainly the hardware is better than anything else at the moment.

Dedicated portables are certainly doomed to be niche relative to smart phones. This realization is only beginning to set in as the 3GS and iPhone4 have only really just proven to people to be such capable gaming machines hardware wise. I know I'll never pick up a dedicated portable system again, but will continue to buy mobile games. The tech curve is going so fast there's not going to be much they can't accomplish.

The market for people looking to buy long $40 games to play on the go is fairly small, compared to people who just want a quick pick up and play experience. Nintendo will probably be better off than Sony, as they'll still have the kids market lead which are the primary consumers of portable gaming, but I'm on the boat of "portable games now cost $2-$10, and no more" and I imagine a lot of people are.

I don't think this will upset normal TV-connected consoles much, but who can know for certain. I would at least bet to a much much smaller degree than to dedicated portables.

I play my iPhone much more than I ever played my DS.

Additionally the point isn't that people buy iPhones for a dedicated gaming experience. It's that it is more than good enough for the majority of consumers that they won't need a dedicated portable gaming experience anymore.

Isn't there a $299 VITA coming with 3g/ATT? If so I think the real question is if it will be able to double as a phone, and, if so, will SONY allow developers to create apps for it. If SONY can create another viable platform beside Android and iOS where the focus is games first and phone second then I think VITA has a chance. Certainly the hardware is better than anything else at the moment.

I'm fairly sure that Sony are cautious of diluting their Xperia brand which seems targeted at exactly this. Personally I'd say Sony have more mileage in the PlayStation brand but I don't run run Sony.

"My view is that smartphones will constitute the quintessential mass-market platform, while dedicated handheld consoles will represent significant and important niches," he explained. "And, to be clear, what I mean with this is that smartphones have the potential to make the majority of the world's population into gamers, therefore greatly widening the overall market and making most traditional platforms 'niche.'"

I know the lower price point will change what people expect and tolerate at other price points, but doesn't the drug dealer metaphore apply?

I bought a 3DS at launch for some reason. I've tried 2-3 games, but didn't care for any of them. Only played each for 30 minutes at the most. I've never really been a big mobile gamer. I've had a GBA, DS and PSP, but they were maybe 1% of my gaming. I'll take a real controller and an HDTV anyday.

I'm sure I've played more games on my iPhone than all other handheld gaming consoles combined. I've always got my phone with me and the games are easy to play.

I bought my niece an iPod touch for Xmas. I figured my sister could buy her more games on it than she'd ever buy on a DS. Plus, my niece got really good playing with my iPhone. I think the DS will lose a lot of market to these kind of sales.

It is a zero sum game in the sense that publishers need to see critical mass on a device before committing resources. $40 games make sense for hardcore gamers (such as the ones commenting above) but what happens when those $40 games only get $20 per game type of resources? If people won't buy Ridge Racer at $40 anymore, what can developers sell at $40? Not every game can be an innovative hit.

So there's a consumer story, the $1 game is a better deal, and that seems like a bad deal for developers. But there are freemium models that are paying quite well on iOS. And on the dedicated systems, AAA titles sometimes aren't profitable. So it is possible for these mobile platforms to simply die on the vine. It's not there there isn't a market for these publishers, it's how large is the market? How profitable is the market? Is there DLC on the 3ds? Is there potential for MMOs?

If the 3ds lineup isn't compelling when there was no other new portable console launched, what will be? Zelda can still come and sell a lot of 3ds's - maybe - but will that change publishers' opinion of their potential?

The 5 hours of play on a 3DS is better than the 1 hour you'd get on a smartphone, if even.

What smartphone do you have? My 20-month old iPhone 3GS can game for a good four-to-five hours on a full charge. This is a a rely but when I first downloaded Field Runners and Plant vs Zombies, those where the playtimes I were getting when I was blitzing through the odd weekend with those games,